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Spirits boom: Local microdistillers benefit from law changes, thirsty buyers

The original copper still Rifino Valentine used when he opened his microdistillery at 161 Vester Ave. in downtown Ferndale is sitting on a shelf collecting dust, as a shrine to the operation's continued growth.

It's too small to use now.

"Someone really wanted to buy it from me, but I just can't sell it," Valentine said. "It reminds me of how far we've come."

Valentine opened the distillery and tasting room in May 2011. In its first full year of operation, Fish Hook Distilling Co. LLC, doing business as Valentine Distilling Co., generated $250,000 in revenue.

Valentine projects up to $8 million in revenue this year and is planning to spend about $2 million on a 20,000-square-foot manufacturing facility that would quadruple output, helping him keep up with growing demand for his artisan spirits.

"We are booming in Michigan," Valentine said. "The rest of this country has been on the craft spirits movement for a while, but it's really catching on here."

Valentine's line of spirits includes Valentine Vodka and White Blossom Vodka, $29.99 for a fifth; Liberator Gin, $31.88; and Woodward Whiskey, $37.74. They are currently sold in seven states, but Valentine says the new facility will allow him to produce enough spirits to enter up to 20 additional markets.

Valentine said the company sold 10,000 cases of spirits last year, but that number could grow to 20,000 cases this year if all goes according to plan.

"We will be able to produce up to 50,000 cases at the new facility, but that doesn't mean we will," Valentine said. "I am building the facility for the next 10 years."

Valentine founded Valentine Distilling in 2011 after spending four years developing the recipe for his vodka with Kris Bergland, a professor who runs the artisan distilling program at Michigan State University.

Valentine says growing interest in craft spirits, success stories from microdistillers and a change to Michigan law are prompting others to enter the industry.

A 2008 revision to state law lowered the price of a microdistiller's license from $10,000 to $150, was rewritten to include nonfruit-based alcohol and allows microdistillers to sell products on location without a Class C liquor license.

Microdistillers cannot produce more than 60,000 gallons of spirits annually.

Valentine said one goal is "to make metro Detroit and Michigan known for spirits. I want to help make this a craft distillery epicenter."

Valentine said he has helped several local distilleries with questions ranging from the distillation process to obtaining the right licenses.

According to the Michigan Liquor Control Commission, there were nine microdistiller license applications last year.

One of those applications came from Peter Bailey and David Landrum, co-founders of Two James Distillery in Corktown, which claims the distinction of being the first legal distillery to open within Detroit's city limits since Prohibition.

Bailey said it took about $1 million to convert a former taxicab repair shop into the distillery and tasting room that opened in November.

"You will need to spend $1 million to be large enough to get a good economy of scale," Bailey said. "And be prepared to put in long hours under strenuous, hard-labor conditions."

Since opening, Bailey said, Two James has secured more than 300 retail accounts and could generate $1 million in revenue in its first full year of production.

Bailey said Two James is on pace to produce 2,000 cases of spirits this year, ramp up to 5,000 cases in year three and exceed 10,000 cases by year five.

"Detroit can become a hotbed of distilling, and so can the state at large,"

Bailey said. "There is plenty of room for competition."

Two James currently has three spirits available for retail sales: 28 Island Vodka, $31.99; Old Cockney Gin, $33.99; and Grass Widow Bourbon, $59.99.

Another of those applications came from Michael Forsyth, director of the Detroit Economic Growth Corp.'s Revolve program, and six young professionals, including a microbiologist, corporate attorneys and an accountant. They are in the midst of opening the Detroit City Distillery, at 2462 Riopelle St., in a former slaughterhouse in the Eastern Market district.

"I think it's the right time to open in Detroit because the city is undergoing a renaissance," Forsyth said. "But at the same time, there is a huge market void to fill for locally produced spirits."

In an earlier interview, Forsyth said the group spent a collective $250,000 to open the distillery.

"It's important not to get caught up in the trendiness that we are in a gold rush for craft booze," he said. "You can't lose sight of what is important: producing great product."

Detroit City Distillery could open for business by the end of the summer.

But Terry Olson, founder of Warren-based The Rebel Spirits Group LLC, who contracted with a 250-year-old distiller in Wroclaw, Poland, to produce a line of ultra premium vodka called Zim's that is shipped to Michigan for distribution, isn't sure local distilleries can compete on a global stage.

"I originally started thinking I would do craft distilling in Michigan," Olson said. "But I felt that I would be just another small vodka distiller. If I want to be a player in the ultra-premium category, then I have to go where the experts are." Zim's vodka costs $38 a bottle for a 750-milliliter bottle.

Olson said the Rebel Spirits Group sold almost 4,000 cases of Zim's vodka in Michigan since it introduced the product in January 2013.

Zim's vodkas earned two masters awards in the "smooth" category at The Vodka Masters 2013 competition held in London, England, in September.

"You have to be ready to compete with the big boys," Olson said. "This is a chess game."

But Valentine doesn't buy it.

Valentine's barrel-aged gin, called Old Tom Liberator Gin, earned a gold medal from the International Craft Spirit Awards in 2013 and the titles "Best in Class" and "Best in Show" at the American Distilling Institute's seventh annual Judging of Craft Spirits.

Valentine Vodka also earned a 94-point rating from one of the world's top spirits professionals, Anthony Dias Blue, higher than recognized brands like Belvedere, Ketel One and Grey Goose.

"I am all for supporting local as long as the quality is there," Valentine said. "In order to make an impact in this industry, we had to make products that competed on a national and international level. That was the most important thing."